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AgNewsCenter.com
A Threat to
Farm and Ranch Taxpayers (and Other Small Businesses)
by Neil E. Harl
In a shocking development, tucked away in the Bipartisan Budget Act of
2015, passed by Congress and signed by the President, there is a
provision affecting farmers, ranchers and other small businesses in a
highly significant way. It signals the end of a 34 year-old tax law
that has been depended upon by thousands of taxpayers. It was a model
of simplicity when enacted in 1982 and has continued to be the best
example of tax simplification to this day. The late 2015 legislation
repeals the “small partnership” exception after 2017.
The “small partnership” exception was passed in 1982 to create a
simpler way for farmers, ranchers and other small businesses to file
their tax returns. The brief provision simply stated that if an entity
had 10 or fewer members (and a husband and wife were considered one
member), and the members were individuals or estates of individuals (C
corporations were later added), the entity was not required to file a
partnership tax return, Form 1065. The income, losses, credits and
other tax items were simply passed through to the members for reporting
on each individual’s tax return, Form 1040.
It is thought that the growing number using the simplification
provision threatened the bottom line of some tax practitioners and the
push was on to repeal it, not in the 2015 tax bill but in the Budget
Bill where the repeal would be less likely to be spotted and resisted.
There were no hearings and no public discussion that the most
significant tax simplification in decades and decades was threatened.
That clandestine effort, unfortunately, was successful and it was
repealed through the Budget Bill.
What needs to be done?
The repeal is not effective until 2018 so the task now is to contact
every House and Senate member to let them know that the best example of
tax simplification in decades is under attack with a request to support
reinstatement of the provision. The tax simplification did not have an
impact on Government revenues. It simply required far less time and
effort to file the tax return. The provision is found in Section
6231(a)(1)(B) of the Internal Revenue Code
Help get this corrected before it costs our agri-businesses and other
small businesses -- they are already over-burdened with government
regulations!
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